AUTOMOTIVE & MOBILITY Welcome to the 26th edition of our newsletter on developments in the published by Morgan Lewis’s automotive & Q4 | 2020 mobility team with contributions from lawyers in our offices around the globe. We counsel our automotive clients on a broad range of TABLE OF CONTENTS industry-specific issues, including matters relating to mergers and acquisitions, antitrust, litigation, regulatory concerns, intellectual Mergers & Acquisitions...... 2 property, and labor and employment. Antitrust...... 3 This issue of Morgan Lewis AUTOMOTIVE & MOBILITY, which covers Regulatory...... 3 the fourth quarter of 2020, touches on significant acquisitions, notably Intellectual Property...... 4 in the trucking business, new antitrust guidance and regulatory rules, and recent trends in intellectual property. All issues of Morgan Lewis AUTOMOTIVE & MOBILITY are available at www.morganlewis.com.

IN THIS ISSUE

Mergers & Acquisitions: INEOS to Acquire Mercedes-Benz The contents of Morgan Lewis AUTOMOTIVE & MOBILITY are provided for your convenience Site; L Catterton to Acquire Hero; Denso to Acquire Jeco; DexKo to and do not constitute legal advice or create Acquire Nordelettronica; Sumitomo to Sell Stake in JV; SAIC an attorney-client relationship. Prior results do not guarantee similar outcomes. Attorney Motor to Establish JV with Pudong Government and Alibaba; Scania Acquires Advertising. Morgan, Lewis & Bockius UK LLP Nantong Gaokai; Dana to Acquire Light-Vehicle Thermal Business of Modine; is a limited liability partnership registered in England and Wales under number OC378797 Adler Pelzer to Acquire Acoustics Division of STS Group; Daimler Truck to and is a law firm authorised and regulated by Enter into Partnership with Luminar; to Acquire UD ; ElringKlinger the Solicitors Regulation Authority (SRA). The SRA authorisation number is 615176. to Establish JVs with Plastic Omnium and Airbus; and BYD to Establish JV; and Navistar Entered into Merger For further information, or if you would like Agreement; Tesla to Acquire ATW Assembly & Test; Shyft to Acquire F3 MFG to discuss the implications of these legal developments, please do not hesitate to get in touch with your usual contact at Morgan Lewis. Antitrust: EC Antitrust Guidance on Cooperation between Carmakers and Suppliers; PSA and Fiat Merger Approved by EC, Subject to Conditions www.morganlewis.com ©2021 Morgan, Lewis & Bockius LLP Regulatory: ECJ to Rule on Admissibility of Defeat SAIC Motor to Establish JV with Pudong Government Devices; Development Plan 2021-2035 for Chinese NEV and Alibaba Sector Published Chinese carmaker SAIC Motor Corp., the government of ’s Pudong New Area, and ecommerce company Intellectual Property: LIDAR a Hot Trend for SPACS; Alibaba have agreed to establish a CNY 10 billion ($1.5 Unified Patent Court in Europe; Can AI Be an Inventor?; billion) JV named Zhiji Motor. The JV, in which SAIC will Several Automotive Players Have Reported Semiconductor hold a majority stake, will be active in the development of Shortages all-electric vehicles.

Scania Acquires Nantong Gaokai Swedish truck maker Scania has agreed to acquire Nanton MERGERS & ACQUISITIONS Gaokai, a truck maker based in , from state-owned investment firm Jiangsu Gaokai Investment Development INEOS to Acquire Mercedes-Benz Manufacturing Site Group, on undisclosed terms. Through the acquisition, British company INEOS Automotive, a subsidiary of global Scania also obtains a Chinese truck-manufacturing license. petrochemicals manufacturer INEOS Group, has acquired the Hambach, France, manufacturing site of German Dana to Acquire Light-Vehicle Thermal Business of carmaker Mercedes-Benz, on undisclosed terms. Next to Modine INEOS Automotive’s own 4x4 model, the Grenadier, the Dana Inc., a power-conveyance and energy-management Hambach site will continue to produce an electric minicar solutions provider based in the , agreed to for Mercedes-Benz’s Smart brand. acquire a part of the thermal-management business of US based Modine Manufacturing Company’s automotive L Catterton to Acquire Truck Hero segment. The acquired business represents approximately An investment consortium led by private equity (PE) firm 70% of Modine’s automotive revenues and includes eight L Catterton acquired a controlling stake in Truck Hero, a major facilities operating in China, Germany, Hungary, US-based manufacturer of truck bed covers and other Italy, the Netherlands, and the United States. The purchase accessories, on undisclosed terms. Truck Hero is backed price amounts to $1; Dana also assumes certain financial by PE firm CCMP Capital Advisors, which remains a major liabilities. stakeholder. Adler Pelzer to Acquire Acoustics Division of STS Group Denso to Acquire Jeco Adler Pelzer Group, a German manufacturer of acoustic Japanese auto-parts maker Denso Corporation announced and thermal components and systems for the automotive its acquisition of all remaining shares in Jeco Co., Ltd., a sector, acquired the acoustics division of German manufacturer of clocks, air conditioner panels, and other automotive parts supplier STS Group AG on undisclosed sensors for automobiles, through a share swap. Denso, terms. The acquired business includes five plants located which currently holds 35.21% in Jeco, will acquire 450,115 in Brazil, Italy, and Poland. treasury shares in the transaction. Daimler Truck to Enter into Partnership with Luminar DexKo to Acquire Nordelettronica Daimler Truck AG, the commercial vehicle division of US-based trailer running gear, chassis assemblies, and German carmaker Daimler, acquired a minority stake related components maker DexKo Global Inc., indirectly in Luminar Technologies, Inc., a US-based autonomous through its subsidiary AL-KO Vehicle Technology Group, driving technology company and developer of LIDAR acquired Nordelettronica S.r.l., an electronics equipment (light detection and ranging) hardware and software. The maker based in Italy, on undisclosed terms. acquisition is part of a strategic partnership between the two companies that aims at enabling automated trucking Sumitomo to Sell Stake in Mazda Mexico JV on highways. Japanese conglomerate Sumitomo Corp. announced that it Isuzu to Acquire UD Trucks has agreed to sell its 25% stake in the manufacturing (JV) Mazda de Mexico Vehicle Operation Japanese carmaker Isuzu Motors, Ltd., agreed to acquire to its JV partner, Japanese carmaker Mazda Motor UD Trucks, the Japanese truck business of Swedish Corporation. Financial terms were not disclosed. carmaker Volvo AB, for JPY 243 billion (approximately $2.3 billion). The deal is part of a strategic alliance between

2 Isuzu and Volvo with respect to commercial vehicles.

According to the Alliance Framework Agreement signed ANTITRUST by both companies, the alliance has a minimum duration of 20 years. EC Antitrust Guidance on Cooperation between Carmakers and Suppliers ElringKlinger to Establish JVs with Plastic Omnium and The European Commission (EC) has provided informal Airbus guidance to the European auto industry group ACEA on Auto parts manufacturers ElringKlinger AG (Germany) and how its members can cooperate with suppliers struggling Plastic Omnium S.A. (France) agreed to establish a 60- economically due to the effects of the COVID-19 pandemic 40 JV named EKPO Fuel Cell Technologies. The JV will be without violating European antitrust rules. The EC provided active in the development and mass production of fuel cell the guidance upon a request from ACEA regarding possible stacks for CO2 neutral mobility. In addition, ElringKlinger cooperation between carmakers and suppliers, in particular with respect to the possible formation of “customer groups” agreed to acquire a minority shareholding in a newly set- to deal with distressed suppliers. According to publicly up JV with Dutch aerospace company Airbus within the available information, the EC’s guidance includes various area of fuel cell technology. recommendations and safeguards to limit antitrust risks, including measures to ensure voluntary participation for any Hino Motors and BYD to Establish Electric Vehicle JV company that wishes to participate in potential cooperation Chinese conglomerate BYD Company, Ltd., active in, among discussions, as well as measures to limit the exchanged other things, the manufacture of batteries, and Japanese information in this context. commercial vehicles maker Hino Motors, Ltd., agreed to establish a Chinese 50-50 JV for the development of PSA and Fiat Chrysler Merger Approved by EC Subject to commercial electric vehicles and components of electric Conditions vehicles. The JV is part of a strategic business alliance on The EC has cleared the proposed merger between carmakers which the two companies agreed earlier this year. SA (PSA) and Fiat Chrysler N.V., subject to conditions. After its investigation, the EC raised concerns TRATON and Navistar Enter into Merger Agreement that the merger could harm competition in markets for light commercial vehicles in nine member states of the European TRATON SE (TRATON), a German manufacturer Union. of commercial vehicles, and Navistar International Corporation (Navistar), a leading US truck manufacturer, In order to address these concerns, the parties offered a have entered into a definitive merger agreement. TRATON, remedy package, which includes the commitment to extend which currently owns 16.7% of the outstanding shares of a cooperation between PSA and Motor Europe under Navistar’s common stock, will acquire all of Navistar’s which PSA produces small light commercial vehicles for remaining shares at a price of $44.50, resulting in a total sale under the Toyota brand, mainly in the European Union. purchase price of approximately $3.7 billion. PSA and Fiat Chrysler committed to increasing the available production capacity for Toyota and reducing transfer prices for the vehicles and associated spare parts/accessories. Further, Tesla to Acquire ATW Assembly & Test the remedy package includes a commitment to amend the US electric vehicle manufacturer Tesla has acquired ATW “repair and maintenance” agreements for passenger Assembly & Test - Europe GmbH, a battery assembly line and light commercial vehicles in force between PSA, Fiat manufacturer located in Germany, from Canada-based Chrysler, and their repairer networks to facilitate access for ATS Automation Tooling Systems, on undisclosed terms. competitors to the merged entity’s repair and maintenance networks. Shyft to Acquire F3 MFG The proposed merger had been already cleared by the US-based specialty vehicles manufacturer The Shyft Brazilian, Mexican, and American competition authorities, Group acquired F3 MFG Inc., an aluminum truck body among others. and accessory manufacturer from the United States, on undisclosed terms. Shyft will integrate F3 and its DuraMag and Magnum products in Shyft’s specialty vehicles REGULATORY business.

ECJ to Rule on Admissibility of Defeat Devices Mobility The European Court of Justice (ECJ), in a judgment on December 17, 2020 (C-693/18), ruled that software used to control a car’s exhaust gas recirculation (EGR) valve must be

3 considered a “,” which is illegal under European (SPAC). It began trading on October 1 under the symbol law. Regulation No. 715/2007 expressly prohibits the use of VLDR and has a market cap of about $4 billion. LIDAR is defeat devices, which reduce the effectiveness of emission one technology to detect objects while driving, critical to control systems under normal conditions of vehicle use. In self-driving vehicle and safety systems. Underscoring the this instance, the French Tribunal de Grande Instance de importance of this technology, more LIDAR companies have Paris referred the case to the ECJ seeking clarification on the gone or are about to go public via SPAC merger, including definition of “emission control system.” Luminar, which went public via a $3.4 billion SPAC merger (trading under symbol LAZR). Others reportedly joining The EGR system redirects part of the exhaust gas from the LIDAR SPAC merger trend include Aeva ($2.1 billion), combustion engines to the engine’s air supply to reduce Innoviz ($1.4 billion), and Ouster ($1.9 billion). the car’s NOx emissions when they are produced within the engine itself (upstream reduction). However, the ECJ found that it would be apparent from Regulation No. 715/2007 Unified Patent Court in Europe that the concept of “emission control system” includes Following the UK government’s decision to withdraw from not just technologies to reduce emissions after such have the Unified Patent Court (UPC) project, many people been produced (downstream reduction) but also upstream thought that the project had been dealt a terminal blow. reduction technologies such as the EGR system. However, the Bundestag (the German federal parliament) passed the UPC Agreement in November 2020 by a two- Further, the ECJ ruled that installing a defeat device may thirds majority, followed by the Bundesrat passing a bill of only be justified if the device is used to protect the engine ratification on December 18, 2020. This paves the way for against sudden and exceptional damage, and that only those ratification of the UPC Agreement in Germany, after which immediate risks of damage that give rise to a specific hazard Germany will join 15 signatory states. The agreement when the vehicle is driven justify the use of a defeat device. requires the three largest patent holders (which includes Germany and France) to ratify it before it can come into Development Plan 2021-2035 for Chinese NEV Sector force, which may happen after Germany ratifies the Published agreement in 2021. The General Office of the State Council formally issued its Development Plan for New Energy Vehicle Industry (2021- Can AI Be an Inventor? 2035). The Development Plan aims to ensure an orderly development of China’s new energy vehicle (NEV) sector, Both the UK intellectual property office (UK IPO) and the promotes the establishment of a unified national market, European Patent Office (EPO) refused to accept patent and boosts industry integration and market competitiveness. application filings that identify as the inventor an artificial Starting in 2021, NEVs should account for no less than 80% intelligence (AI) machine called DABUS. In a decision in of the new or replaced , taxis, and logistics-distribution September, a High Court judge upheld the UK IPO’s refusal vehicles in the public transportation sector in regions such as because DABUS is not a person (natural or legal), and the national ecological civilization pilot zones, or other key the 1977 Patents Act did not envisage an inventor being regions with a need to decrease atmospheric pollution. a nonperson. DABUS also cannot transfer rights to the invention to the entity applying for the patent. The US Patent In this context, the Development Plan provides for several and Trademark Office has similarly found patent inventorship measures, including supporting: is limited to natural persons. Recognizing the importance of 1. the further development of key technologies including these issues, the World Intellectual Property Office is running vehicle operating systems and batteries; a series of “Conversations on IP and AI” to debate related policies and recently held a virtual conference on the subject 2. the expansion of infrastructures such as power on December 17 and 18, 2020. charging networks, hydrogenation, and fast-charging expressways; and Several Automotive Players Have Reported 3. international cooperation in the field of NEVs. Semiconductor Shortages Several automotive original equipment manufacturers and suppliers have reported shortages of semiconductors INTELLECTUAL PROPERTY that may impact production in late 2020 and into 2021. The trends toward infotainment systems, connected car LIDAR a Hot Trend for SPACS features, and electrification in vehicles have resulted Velodyne, which has over 30 patents on LIDAR by inventor in automobiles using many more semiconductors than David Hall, who was named an inventor of the year in 2018 historical norms. That, coupled with the rapid recovery of for his work on LIDAR, became the first LIDAR company automobile demand, the pandemic, and competition for to go public via a special-purpose acquisition company semiconductors with other industries, has led to shortages.

4 OUR AUTOMOTIVE & MOBILITY TEAM Morgan Lewis’s automotive & mobility team partners with global automotive industry companies in complex transactions and matters, building and protecting their IP portfolios, as well as crafting and implementing customized business, finance, and tax strategies that are effective for many years. Taking a holistic view of the auto industry—the advent of unprecedented government involvement, a shifting competitive landscape, the race for new technology and talent, and greater consumer and regulatory demands involving safety and the environment—we assist in developing precise legal strategies aimed at advancing our clients’ specific business objectives.

CONTACTS AND CONTRIBUTING AUTHORS

Robert C. Bertin Florian Hinderer Philip W. Russell 1111 Pennsylvania Ave., NW OpernTurm 77 West Wacker Dr. Washington, DC 20004-2541 60306 Frankfurt , IL 60601-5094 USA Germany USA +1.202.373.6672 +49.69.7140.0764 +1.312.324.1743 [email protected] [email protected] [email protected]

Daniel L. Goldberg Margaret Luo Daniel S. Savrin One Federal Street 989 Changle Road One Federal Street Boston, MA 02110-1726 Shanghai 200031 Boston, MA 02110-1726 USA China USA +1.617.951.8327 +86.21.8022.8521 +1.617.951.8674 [email protected] [email protected] [email protected]

Brent A. Hawkins Michael Masling David L. Schrader One Market, Spear Street Tower OpernTurm 300 South Grand Avenue, 22nd Floor San Francisco, CA 94105-1596 60306 Frankfurt , CA 90071-3132 USA Germany USA +1.415.442.1449 +49.69.714.00.753 +1.213.612.7370 [email protected] [email protected] [email protected]

Elizabeth B. Herrington 77 West Wacker Dr. Chicago, IL 60601-5094 USA +1.312.324.1445 [email protected]

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